What is the difference between firm and industry (sales or employment), and which should I use?
Firm allows displacement due to competition in the local and nearby markets and the US market. In other words, “crowding out” effects may arise. Industry does not account for any “crowding out” effects. Industry is equivalent to increasing exports to rest of world, and therefore does not compete with the nation or with the particular region. Both firm and industry apply to sales or employment shocks. Firm employment explicitly factors in displacement or augmentation of existing firms. In a sense, when you reduce employees, other firms hire many of them back, which mitigates the employment impact in the Results. Industry employment changes actually reduce jobs by the full amount input, in addition to causing further reductions through the forward and backward linkages in the input-output table. The concept of firm sales is comparable: when you reduce firm sales, other firms in the same industry expand to fill the void, thus mitigating the negative sales impact in the aggregate. Meanwhil
